The great post-pandemic food reversion is underway, where consumers are doing a lot more dining out and celebrating, and a lot less panic-eating Lucky Charms in the kitchen at 2 a.m. than they were a year ago.
For General Mills, whose portfolio boasts eight different $1B+ brands, including Betty Crocker, Cheerios, Pillsbury and Old El Paso, that shift saw its latest sales results drop 10 percent for the three months ending May 30, the company reported on Wednesday (June 30).
Still, the company said that while the year ahead will see a decline in demand for at-home food products, it will still remain higher than before the pandemic.
“Although in some corners, people thought demand would kind of fall off a cliff when people started going back to the office again, returning to normal pre-pandemic, we actually think some of these behaviors will be sticky, and that’s what we have seen,” General Mills CEO Jeff Harmening said on a call with analysts. He later specified, “More people are going to work from home more often than go into the office every day, and we’re fairly certain that that is here to stay … [also,] many millennials have really gained cooking skills and baking skills and newfound confidence in the kitchen, and they’ve found that they can save money while doing it.”
The “meals and baking” category in the U.S. saw the most dramatic decline in sales, falling 30 percent in the quarter — which makes sense, in light of the stress-induced baking trend in the first few months of quarantine — while U.S. cereal sales were down 16 percent. All U.S. categories sold less than last year (though sales in Canada were up 3 percent). The across-the-board dip suggests a marked decline in consumers buying food for at-home consumption in April and May.
The company’s most recent quarter ended May 30, and its sales decrease was much steeper than competitors. Post, for instance, only saw a 0.7 percent sales decrease in its most recent quarter, which ended March 31, and the Kellogg Company saw its sales increase 5 percent for the quarter ending April 3.
The news of these flagging sales comes amid reports that grocery visits are declining (both month over month and year over year), while restaurants are seeing record-high seatings, with visits skyrocketing not just over 2020 levels, but also compared to pre-pandemic. Consequently, General Mills expects away-from-home sales (which only account for about 10 percent of the company’s sales) to increase. Interestingly, however, despite the dining boom of recent months, the company does not expect away-from-home demand to reach pre-pandemic levels.
Part of the issue for packaged food brands such as General Mills may be not only the return to restaurants, but also the fact that restaurants have gained a large share of consumers’ food-at-home spending. PYMNTS research from a survey of over 5,000 U.S. consumers — which was published in The Bring-It-to-Me Economy: How Online Marketplaces and Aggregators Drive Omnichannel Commerce, created in collaboration with Carat by Fiserv — finds that restaurant meals at home are here to stay. The study notes that two-thirds of consumers are now ordering restaurant meals to be eaten at home, and that restaurant customers are 31 percent more likely to order for off-premise consumption than on-premise.
“As we emerge from the pandemic, it’s clear that consumer behaviors are not returning to what they once were,” said Harmening. “Simply put, we are ending one period of significant consumer disruption only to start another.”
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